Y v. A

FCMC 12889 / 2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 12889 OF 2002

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J U D G M E N T

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1. This is an application by the petitioner for the following orders : -

(1)	The respondent to transfer the premises in Tuen Mun, New Territories, Hong Kong which has been the parties’ matrimonial home during their marriage (“the matrimonial home”); and
(2)	The existing charging order on the matrimonial home in favour of the Intervener be discharged.

2. For convenience, I shall call the petitioner the husband and the respondent the wife in this judgment.

Background

3. The husband and wife got married on 28^th May 1986.

4. In 1987, they entered into a sale and purchase agreement for the purchase of the matrimonial home at a price of $298,356.  The completion of the sale and purchase took place on 20^th April 1988 when a deed of Assignment was executed conveying the title to the husband and wife holding as joint tenants.  A legal mortgage was also created in favour of a bank for the sum of $260,000.

5. The mortgage was redeemed on 27^th February 1997 and all the title deeds were released to the husband and wife.

6. In or about August 2000, the wife approached the Intervener, which was a money lender to take out a loan of $220,000 in her sole name.  The title deeds of the matrimonial home and a post-dated cheque of $220,000 were also deposited with the Intervener as security for the said loan.

7. The wife later defaulted in the repayment of the loan and her cheque was also dishonoured.  The wife left the matrimonial home in May 2001 and disappeared.  Unsurprisingly, the Intervener took out an action in the District Court and default judgment on the sum of $220,000 was obtained.  A charging order absolute on the matrimonial home was also obtained by the Intervener on 27^th July 2001.  Subsequently, 3 other charging orders were made absolute on 8^th October 2001, 29^th October 2001 and 2^nd November 2001 respectively in favour of some other parties who have not taken part in this litigation (all 4 charging orders are hereinafter collectively called “the charging orders”).

8. On 6^th November 2002, the husband commenced divorce proceedings against the wife based on the ground of unreasonable behaviour.  He claimed that the wife had an affair with a man and had also incurred debts for more than $1,000,000 causing many debt collectors to disturb the family.  In the petition, he asked for a dissolution of the marriage with the custody of the 2 children be granted to him.  He also asked for a transfer order in respect of the matrimonial home.

9. On 10^th November 2003, a decree nisi for divorce was granted and the custody of the 2 children was given to the husband.

10. On 1^st March 2004, leave was granted to the Intervener to be joined as a party to these proceedings.

Evidence of the Husband

11. According to the husband’s evidence, he was a full time roasted meat worker earning about $8,500 per month at the time of marriage.  He was the sole breadwinner.  In April 1988, the family moved from a rented property to the matrimonial home which was purchased in the joint names of the husband and wife.

12. The husband said the matrimonial home was mortgaged to a finance company with the downpayment and other associated charges of about $54,000 all paid by him solely.  He said the wife had no income and all subsequent mortgage repayments were made by him alone.  In other words, the wife had not made any financial contribution towards the purchase of the matrimonial home.

13. In his affirmation dated 27^th May 2003, which was accepted as part of his evidence in chief, the husband said before the purchase of the property, there were several heated quarrels between them on whether the wife should be registered as a joint owner.  He said he did not intend to register the wife’s name simply because he was the only person responsible for all the living and household expenses.  However, due to the insistence of the wife and partly for convenience, he agreed to have the wife’s name registered.  He said he had never intended the wife to be a beneficial owner of the matrimonial home.

14. However, under cross-examination by the Intervener’s counsel, the husband retracted and said the wife had never insisted on the title and there had never been any argument between them.  He said it was a joint idea to have both names registered.  He agreed to counsel’s suggestion that the registration of the wife’s name was to give her some protection.  He further agreed that he was well aware of the legal effect of a joint tenancy, namely that if he should pass away in future, his interest would be taken up by the wife.

15. The mortgage was redeemed in 1997.  The returned title deeds were then put inside a drawer at the matrimonial home to which both the husband and the wife had access.

16. In 1999, the husband began to realise the wife’s gambling habit.  In 2001, the wife had an affair with another man.  She eventually deserted the family and disappeared altogether.  After the desertion, the husband found that the title deeds were missing and debt collectors kept on coming to the matrimonial home to look for the wife.  Finally, there came this charging order of the Intervener in July 2001.

Arguments for the Application

17. As I understand the husband’s case, he relies on the following arguments in support of this application : -

(1)	The wife has disappeared and is not disputing the claim of the husband.
(2)	The purchase of the matrimonial home was financed solely by the husband by way of downpayment and subsequent mortgage repayments.  Therefore, it was argued that the wife had no beneficial interest in the matrimonial home at all.  By operation of the doctrine of resulting trust, the husband should be the sole beneficial owner.
(3)	It should have been obvious to the Intervener that both the husband and wife were joint tenants of the matrimonial home.  As the Intervener had not ascertained the consent and interest of the husband before lending the money, the Intervener should be fixed with actual or constructive notice of the husband’s equitable interest.  Therefore, the charging order can only take after the husband’s interest.
(4)	Under the special circumstances of this case, the court should also set aside the charging order.

Wife’s Default

18. According to the husband, the wife left home in about May 2001 and disappeared.  After the husband has taken out the present proceedings, the wife has defaulted in appearance.  She has failed to attend the trial and there is just no evidence from her on any of the above issues.

Intervener’s Evidence

19. The Intervener has called one witness, namely Mr Lau, who was the manager of the Intervener.

20. According to Mr Lau, on or about 4^th August 2000, the wife came to him and applied for a loan of $220,000.  She represented that she had been working in the catering industry for quite some time with a stable income every month.  She could produce a letter to prove her income and was even accompanied by her boss, a male known as Mr Wong.  She said her husband was also engaged in the catering industry with a stable income of $15,000 per month and she had her husband’s consent to this loan.

21. In addition, the wife produced the title deeds to the matrimonial home as security for the said loan.  She said that the property were in the joint names of her and her husband.  Therefore, she had at least half interest in the property.

22. As the wife was in urgent need of the loan, it was agreed that a personal loan of $220,000 would be given to the wife pending the execution of a formal mortgage on the matrimonial home, which would require the signature of the husband as well.  Apart from the deposit of the title deeds, the wife has also signed and deposited a post-dated cheque in the sum of $220,000 as an additional security for the loan. The terms of the personal loan were that the wife had to repay by 72 monthly instalments of $7,491 each.

23. The wife defaulted from the first instalment repayment.  The cheque deposited by the wife was also dishonoured.  The Intervener later took out proceedings against the wife for the recovery of the said $220,000. The wife defaulted in appearance and judgment was obtained.  Later on, a charging order nisi on the matrimonial home was obtained from the District Court which was made absolute on 27^th July 2001.

24. It is the Intervener’s case that the court should not grant an order for transfer of the matrimonial home, or even if granted, the transfer should be subject to the Intervener’s charging order.

Issues

25. As I see it, there are 4 main issues in this case : -

(1)	the extent of the Intervener’s charging order.
(2)	whether, or to what extent, the wife has a beneficial interest in the matrimonial home.
(3)	whether the husband is entitled to have the matrimonial home transferred to his sole name free from the charging orders.
(4)	whether the charging orders should be set aside.

Findings

26. At the very beginning of the trial, both parties have managed to reach an agreement in respect of the first issue, namely that the extent of the Intervener’s charging order should only affect the interest of the wife, if any, but not as to the entire property.

27. The second issue of the wife’s beneficial interest in the matrimonial home is more controversial.

28. In this regard, I note that there is no evidence from either the wife or the Intervener to contradict the husband’s assertion that he has paid all the monetary contributions towards the initial acquisition and subsequent mortgage repayments of the matrimonial home.

29. There is also no dispute between the parties on the legal principles that are applicable, namely that as the property was conveyed into the joint names of a married couple, the beneficial ownership will depend on the agreement or intention of the parties ascertainable at the time of acquisition.

30. In the case of Pettitt v. Pettitt [1970] AC 777, Lord Upjohn had the following to say at P.813 : -

“In the first place, the beneficial ownership of the property in question must depend upon the agreement of the parties determined at the time of its acquisition.  If the property in question is land there must be some lease or conveyance which shows how it was acquired.  If that document declares not merely in whom the legal title is to vest but in whom the beneficial title is to vest that necessarily concludes the question of title as between the spouses for all time, and in the absence of fraud or mistake at the time of the transaction the parties cannot go behind it at any time thereafter even on death or the break-up of the marriage.

The observations of Davies L.J. in Bedson v. Bedson [1965] 2 Q.B. 666, 685 were plainly made only upon the footing that section 17 had the wider construction.

But the document may be silent as to the beneficial title.  The property may be conveyed into the name of one or other or into the names of both spouses jointly in which case parol evidence is admissible as to the beneficial ownership that was intended by them at the time of acquisition and if, as very frequently happens as between husband and wife, such evidence is not forthcoming, the court may be able to draw an inference as to their intentions from their conduct.  If there is no such available evidence then what are called the presumptions come into play.  They have been criticised as being out of touch with the realities of today but when properly understood and properly applied to the circumstances of today I remain of opinion that they remain as useful as ever in solving questions of title”.

31. So, the real issue here is what the common intentions of the parties were at the time of acquisition.  The intention could be expressed by words or inferred from their conduct.

32. In paragraph 7 of the husband’s affirmation dated 27^th May 2003, he said : -

“

7.

Shortly prior to my purchase of the said property, there were several heated quarrels between the Respondent and me as to which name(s) should be put on the title of the said property.  The Respondent repeatedly insisted that her name must be put on the register of the said property whilst I did not intend to do so simply because I was the only person responsible for all the living and household expenses of the family, and I was and am the head of the family, despite the fact that she was taking care of all the household affairs”.

33. However, this position was contradicted by his oral evidence in court in which he testified to the effect that the wife had never requested the registration of her name as one of the joint owners.  He said it was both parties’ intention to have the wife’s name registered in order to provide the wife with some protection.

34. Leaving aside the doubts that have been created on the veracity of the husband’s evidence due to this obvious inconsistency, it is quite obvious that the registration of the wife’s name was not for no purpose, or just for convenience as described by him in his earlier affirmation.  I am prepared to find that by registering the wife as a joint tenant in the matrimonial home, the common intention of the parties was to give the wife a beneficial interest in the property.  Only with this beneficial interest in the matrimonial home that can really give her the necessary protection as intended by the parties.

35. Since I have made a finding on the common intention of the parties, I do not think the presumption of advancement has any role to play in this case.

36. Since the wife did have a beneficial interest in the matrimonial home, it follows that when the Intervener’s charging order was made absolute, there was a severance and the husband and wife became tenants in common in equal shares : Malahon Credit Co Ltd v. Siu Chun Wah Alice [1987] 2 HKC 79.  As a result, only the wife’s half share was fixed with this charging order.  Again, when the subsequent charging orders were made absolute, only the wife’s half share was fixed with those charging orders, but not the husband’s other half share.

37. As to the third issue of transfer, the fact remains that there is no challenge by the wife to this application.  The husband has now obtained the custody of the children and in view of the wife’s conduct and the guiding principles as lay down in s. 7 of the Matrimonial Proceedings and Property Ordinance, Cap. 192, I find that he is entitled to have the wife’s half share in the matrimonial home transferred to him, but it has to be subject to all the charging orders.

38. In view of the above finding, there is no need for me to go into the last issue of the setting aside of the Intervener’s charging order.

Order

39. Based on the above reasons, I order that the wife’s half interest in the matrimonial home be transferred to the husband subject to the four charging orders, including that of the Intervener’s, within 28 days from the date hereof, failing which the Registrar of the High Court be authorized and requested to execute the transfer in question on her behalf.

Costs

40. Although the Intervener has failed to resist the husband’s application for a transfer order, they have nevertheless succeeded in their contention that the transfer should be subject to their charging order.  Therefore, I will grant an order nisi that the Intervener shall have two-third of the costs of this application with certificate for counsel, such costs to be taxed if not agreed.  The order nisi shall be made absolute within 14 days from the handing down of this judgment.